Post on 12-Jul-2020
Results Presentationfor the year ended 28 February 2014
AGENDA
2
• Performance highlights
• Building capability
• Financial results
• Strategy and Prospects
• 20th Anniversary highlights
– Brands– Logistics– Manufacturing
– Group
PERFORMANCE HIGHLIGHTS
4
PERFORMANCE HIGHLIGHTS
Strong resultsNotwithstanding stressed middle income consumer– evident during second halfof the year
5
PERFORMANCE HIGHLIGHTS
13thconsecutive year
of recordturnover and
profits
6
PERFORMANCE HIGHLIGHTS
20%best ever,
Operating margin
achieved1 year ahead
of plan
7
PERFORMANCE HIGHLIGHTS
20%increased
Headline earnings per share
8
PERFORMANCE HIGHLIGHTS
300to shareholders
Total dividends
cents per share
20%up
9
PERFORMANCE HIGHLIGHTS
R100breaksShare price
through
mark
10
PERFORMANCE HIGHLIGHTS
R10bnexceeds
Market capitalisation
highest ever
11
PERFORMANCE HIGHLIGHTS
(2.1)%lowest ever
Debt toequity ratio
12
PERFORMANCE HIGHLIGHTS
49%Concluded
acquisition ofMr Bigg’s business
in Nigeria
13
PERFORMANCE HIGHLIGHTS
CommissionedCoega Cheese manufacturing
plant inCoega
Development Zone
14
PERFORMANCE HIGHLIGHTS
Opened
165 restaurants and
revamped
185
15
PERFORMANCE HIGHLIGHTS
exceeds
restaurant mark
150
16
PERFORMANCE HIGHLIGHTS
AwardedKruger National Park tender
17
PERFORMANCE HIGHLIGHTS
Launched
in London
18
PERFORMANCE HIGHLIGHTS
Launched
in Mumbai
19
PERFORMANCE HIGHLIGHTS
Implementation of
Fit 4 PurposeBusiness transformation
model concluded• Closer to customer• Closer to consumer
20
PERFORMANCE HIGHLIGHTS
Awarded3rdplace in
Financial Mail’s Top Companies
Awards
21
PERFORMANCE HIGHLIGHTS
Awarded5th place and
Royal Company status in
Business TimesTop 100 Companies Survey
23
20TH ANNIVERSARY SINCE LISTING
24
20 YEAR PERFORMANCE HIGHLIGHTS
Revenue 22.4 R000 2 825 979 49 333
Operating profit 25.2 R000 565 517 6 313
Share price 23.4 cents 9 700 145
Market capitalisation 32.2 R000 9 626 516 36 395
Operating profit margin % 20.0 12.8
2014 1995Compound Growth %
BUILDING CAPABILITY
26
BUILDING GROUP CAPABILITY
Product Platform Expansion Strategy
• Leverage Group’s Core Competencies
• Leadership
• Brands
• Manufacturing
• Logistics
• Retail
• Leverage Group’s strong cash generative balance sheet• Cautiously expand outside of Food Services Franchisinginto Leisure market
BUILDING BRAND CAPABILITY
BRAND Repertoire
27
SYSTEM–WIDE SALES GROWTH
28
11.4%
Domestic
32.5%
Rest of Africa
13.0%
Total
LIKE‐ON‐LIKE GROWTH
29
5.8%
17.9%
6.7%
Domestic Rest of Africa Total
30
NEW RESTAURANTS OPENED
Total 165
Emergingbrands
22 20
45
28
14
36
31
FRANCHISE NETWORK
Total 2 378
551
621
446
167 154 171
72 60
136
Emergingbrands
32
TRADING FOOTPRINT
South Africa 1 935Rest of Africa 347
94 UK
179 Nigeria
4 Ivory Coast
30 Zambia
28 Botswana
35 Namibia
1 935 South Africa
3 DRC
Mozambique 2
Swaziland 7Zimbabwe 9
Mauritius 25
Tanzania 3Malawi 4
Kenya 10Sudan 5
India 2
Dubai 3
United Kingdom 94India 2
BRAND HIGHLIGHTS
33
• Despite slow down of casual dining category recorded a 7% growth in customer count
• Growing interest for the brand occurring in Rest of Africa
• Growth has been contained ‐ a function of aggressivecompetitive pricing
• Continues to hold its coffee and breakfast leadership position despite “war zone” surrounding this day part
• Another year of strong results recording 18.6% growth incustomer count
• Growth in Rest of Africa continues to surge recording like‐on‐like turnovers of 26.3%
BRAND HIGHLIGHTS
• Growing interest from landlords, investors and consumers• Opening of reformatted design in Umhlanga – maiden entry into KZN
• Another year of phenomenal organic and numeric growth underpinned by 20.7% increase in customer count
• Growth fuelled by quality and premium positioning versus“fish & chip shop” competitor offerings
• Stabilisation and consolidation process has commenced• Famous Brands’ best operating practises being implementedacross the business
• Proof that those who have money continue to spend it– 20% like‐on‐like growth versus prior year
• Dubai opening imminent – 1st international restaurant34
BRAND HIGHLIGHTS
35
• Reformatted look and feel for both brands concluded and revamp programme gaining momentum
• Strong potential for Fego partnership with Shell Ultra City sites based on successful trial at Middelburg
• New look and feel concluded. Revamps progressing, albeit slowly
• Overhaul of IP concluded and conversion of non‐Keg sites toBrewers Guild continuing
• Roll‐out across Netcare group progressing well with 7 conversions concluded this year
36
BRAND RATIONALISATION
• Robust re–evaluation of existing brand repertoire remainsa constant strategy
• Brands exited during the year and or being scaled back include: • House of Coffees
• Brazilian Café
• Juicy Lucy
• Blacksteer Home of Shisanyama
• McGinty’s
• Contribution to Group turnover and profitability of aboveis negligible
BUILDING LOGISTICS CAPABILITY
Midrand
Nelspruit
Bloemfontein
CapeTown Port Elizabeth
Pinetown
37
Total 11.5%
38
REVENUE GROWTH ‐ LOGISTICS
Mpumalanga
10.7% 10.4% 11.3% 10.5%12.6%
19.8%
Free StateEastern CapeWestern CapeKwa‐Zulu NatalGauteng
39
LOGISTICS HIGHLIGHTS
• Contextual environment characterised by above‐inflation increases in labour, diesel and costs of e‐tolls
• Exceeded R2 billion annual turnover for the first time
• Owner Driver contribution to total case sales delivered reaches 40.2% (2013: 26.8%)
• Completed relocation of Eastern Cape distribution centre toCoega Development Zone
• Achieved best‐ever operating margin of 4%
BUILDING MANUFACTURING CAPABILITY
EasternCape
Midrand/Cape Town
Midrand/Cape Town
Midrand Baynesfield Centurion/Pinetown
SunderlandRidge
40
CoffeeFruit JuiceIce CreamSauce and Spice
BakeryMeat Processing
Total 29.6%
41
REVENUE GROWTH ‐MANUFACTURING
9.1% 6.3%13.8% 10.1% 5.9%
121.9%
42
MANUFACTURING HIGHLIGHTS
• Review period characterised by significant improvements in yields, efficiencies and utility usage
• Strong growth fuelled by full year Coffee Company turnover and take‐on of additional franchised brand business
• Launch of Mugg & Bean retail
• Integration of Turn ‘n Tender sauce products into Sauce andSpice Plant
• Integration of various speciality breads into FBGBC• Integration of Steers brand business into FBCMC
• Operating margin declined to 13.1% a function of deliberate margin absorption
FINANCIAL RESULTS
Revenue (Rm) 2 826 12
Operating profit (Rm) 566 21
Cash generated before changes in working capital (Rm) 602 20
Earnings per share (cents) 406 20
Headline earnings per share (cents) 406 20
Total dividends per share (cents) 300 20
Net debt / equity (%) (2) 8 (py)
Dividend cover (times) 1.4 1.4 (py)
Return on equity (%) 36 36 (py)
44
SALIENT FEATURES
F 2014 % changeRm
Revenue 2 826 2 516 12
Cost of sales (1 599) (1 463) 9
Gross profit 1 227 1 053 17
Selling and administrative expenses (661) (587) 13
Operating profit 566 466 21
Share of profit of associates 5 ‐ 100
Net interest paid (3) (4) (19)
Profit before tax 567 462 23
Taxation (162) (131) 24
Profit for the year 406 331 2245
INCOME STATEMENT
F 2013 % changeF 2014Rm
15491685
18782156
2516
2826
0
500
1000
1500
2000
2500
3000
2009 2010 2011 2012 2013 2014
46
REVENUE
Rm
262 308358
413466
56616.9
18.3
19.1 19.118.5
20.0
15
16
17
18
19
20
21
0
100
200
300
400
500
600
2009 2010 2011 2012 2013 2014
47
OPERATING PROFIT
%Rm
Assets
Property, plant and equipment 206 194 12
Intangible assets 870 800 70
Investments in associates 53 ‐ 53
Working capital 128 135 (7)
1 257 1 129 128
Funding
Equity 1 235 1 000 235
Net borrowings (26) 81 (107)
Deferred liabilities and current tax balances 48 48 ‐
1 257 1 129 128
48
STATEMENT OF FINANCIAL POSITION
F 2013 MoveF 2014Rm
85 910
100
200
300
400
500
600
700
800
Opening cash Closing cash49
CASH FLOW
594Cash from operations
167Tax
271Dividends
112
3 Interest
35
Rm
Funding raised (net)
Capex (net)
RevenueFranchising and development – Domestic 19 538 477 13Supply Chain 76 2 145 1 919 12Manufacturing 33 927 715 30Logistics 72 2 021 1 812 12
Corporate ‐ 1 1 ‐South Africa 95 2 684 2 397 12International (Rest of Africa and UK) 5 142 119 19UK 3 92 83 11Rest of Africa 2 50 36 39
100 2 826 2 516 12
50
SEGMENTAL ANALYSIS
F 2013 % changeF 2014% of totalRm
Operating Profit Franchising and development – Domestic 58 325 287 13Supply Chain 36 204 161 27Manufacturing 22 122 98 24Logistics 14 82 63 30
Corporate ‐ 1 1 ‐South Africa 94 530 449 18International (Rest of Africa and UK) 6 36 17 112UK 2 13 5 160Rest of Africa 4 23 12 92
100 566 466 21
51
SEGMENTAL ANALYSIS
F 2013 % changeF 2014% of totalRm
Operating marginFranchising and development – Domestic 60.4 60.1Supply Chain 9.5 8.4Manufacturing 13.1 13.6Logistics 4.0 3.5
CorporateSouth Africa 19.7 18.7International (Rest of Africa and UK) 25.3 15.0UK 14.0 6.5Rest of Africa 46.1 34.8
Group 20.0 18.5
52
SEGMENTAL ANALYSIS
F 2013F 2014%
40.7 42.5 43.3 42.8 41.8 43.4
23.8 24.2 24.2 23.7 23.3 23.4
16.918.3 19.1 19.1 18.5 20.0
05
101520253035404550
2009 2010 2011 2012 2013 2014
Gross Profit Margin (%) Expense to Turnover (%) Operating Margin (%)
53
PRODUCTIVITY AND MARGIN RATIOS
%
5.26.2
7.48.7
10.2
12.445.8
27.5
14.39.7 8.1
(2.1)
‐10
0
10
20
30
40
50
0
2
4
6
8
10
12
14
2009 2010 2011 2012 2013 2014
Net asset value per share (R) Debt/Equity (%)
54
RATIOS
Debt/Equity %NAV
STRATEGY AND PROSPECTS
56
BUILDING GROUP CAPABILITY
• Cautiously embark on Product Platform Expansion Strategy
• Continue to show gains as a function of Fit 4 Purpose model
• Closer to the customer
• Closer to the consumer
• Progress BBBEE initiative
• Progress Executive management succession
• Progress Board transformation
57
BOARD CHANGES
Retirement ofMr Peter Halamandaris as Non Executive Chairman (retained as Non Executive Director)
Retirement ofMr Hymie Levin asNon Executive Director
Appointment ofMs Santie Botha as Independent Chairman
Appointment ofMr Chris Boulle asNon Executive Director
Appointment ofMr Khumo Shuenyaneas IndependentNon Executive Director
58
BUILDING BRAND CAPABILITY
• Build momentum ‐ first‐to‐market in Rest of Africa
• Continue with repair, consolidation and growth strategy forMr. Bigg’s Nigeria
• Find solutions for entry into Ghana and Angola• Position FB UK as a beachhead for “global” growth• Complete integration of Wakaberry and expand national footprint
• Conclude and take to market re‐engineered Wimpy brand
• Conclude and take to market repositioned Steers brand
• Continue to exploit Debonairs Pizza per capita consumption growthin parallel with chicken category
• Open 300 new restaurants
59
BUILDING LOGISTICS CAPABILITY
• Conclude Midrand capacity project which includes:
• Potential to take‐back frozen distribution in Gauteng
• Option of new distribution centre in Polokwane
• Implementation of Demand Replenishment Planning (DRP)across total business
• National roll‐out of FLO (distribution routing andscheduling model)
60
BUILDING MANUFACTURING CAPABILITY
• Expand Coffee Company range
• Take‐on of frozen yoghurt product manufacture for Wakaberry
• Take‐on of KZN bakery business at Midrand, currently outsourced
• Conclude commercial case for commissioning of:
• Serviette manufacture
• Milky Lane retail offering
• Ramp up profitability and contribution from Coega Cheese
• Conclude commissioning of pastry manufacturing plant in Lagos
61
PROSPECTS
• Mainstream middle income consumers will remain “stressed”
• Competitive climate will remain fierce ‐ “battle” for market share
• Increase in non‐traditional competitors in food servicespace / landscape
• Race to be first‐to‐market in Rest of Africa will intensify
• Value and quality will remain key drivers of growth
• Marketing will become an ever increasing strategic advantage‐ “chess versus darts”
• Margins will remain under pressure ‐ franchisor and franchisee
62
FAMOUS BRANDS – YOU’RE IN GOOD COMPANY
• Continue to exploit runway which the Food Service landscape presents by way of:
• Acquisitive growth – “best in class” franchised brands • Organic growth – like‐on‐like turnover• Numeric growth – new restaurant openings • Downstream growth – expansion of logistics and manufacturing services and products
• Upstream growth – exploring opportunities to expand our retail range
• Cautiously explore opportunities outside the classical food service arena, where we can leverage our core competencies
Results Presentationfor the year ended 28 February 2014
INDUSTRY TRENDS DRIVERS
65
TECHNOLOGY
• Consumers are always “on” andalways engaging
• Local retailers are adopting online loyalty and value programmes to help gain and retain share of wallet
66
DAY PARTS
• Introduction of new day parts and blurringof occasions
•Meal times moving away from the traditional 3 square meals a day, to eating “on the fly”
67
PREMIUMISATION
• The overall market has shifted into “premiumisation”
•Mainstream brands are starting to shift into more premium “gourmet” type products
68
VALUE FOR MONEY
• Value for money has been redefined since the start of the recession in 2008
• Value is about delivering against the need for best quality products, big portions and good service, not just price
69
QSR MARKET USAGE
• 62.5% of all South Africans aged 15+ visit QSR/CD outlets at least once a month or more
• Visits have increased by 13% in the past 4 years
Source: Stats SA Food & Beverage Statistical Release
55.7%
58.6%
61.2%62.5%
2010 2011 2012 2013
70
THE CATEGORY IN REVIEW
Source: AMPS 2009‐2013
2 200
2 438
2 632
2 757
2 889
AMPS
J‐J 2
009
AMPS
J‐J 2
010
AMPS
J‐J 2
011
AMPS
J‐J 2
012
AMPS
J‐J 2
013
000s30
.0
28.0
26.5
23.1
18.8
70.0
72.0
73.5 76.9 81.2
AMPS
J‐J 2
009
AMPS
J‐J 2
010
AMPS
J‐J 2
011
AMPS
J‐J 2
012
AMPS
J‐J 2
013
< R50 > R50
38.8
40.2
35.8
34.9
36.1
40.7
42.3 46.8
43.2
44.2
AMPS
J‐J 2
009
AMPS
J‐J 2
010
AMPS
J‐J 2
011
AMPS
J‐J 2
012
AMPS
J‐J 2
013
Weekly Monthly
MORE PEOPLE… VISITING LESS… SPENDING MORE…
71
QSR CATEGORY MARKET PENETRATION TRENDS
Source: AMPS 2010 ‐2013
53.1
19.6
13.1
4.5
58.0
21.1
14.6
5.6
59.0
20.8
14.9
6.6
59.1
21.2
15.1
7.3
0
10
20
30
40
50
60
70
Chicken Burgers Pizza Fish
2010 2011 2012 2013
15.3%8.2%
11.3%
62.2%
UNDERSTANDING CONSUMERS IN THEMANY AFRICAS
73
“African consumers are
eager tospend,
buying makes
them happy”Source: BCG’s 2013 Africa Consumer Sentiment Survey
74
POWER AND PROMISE OF BRANDS
“Brands are powerful in Africa, but favourites vary by country and age group. A one‐size‐fits‐all approach won’t work on this diverse continent.
According to our survey, almost 70 percent of Africans feel that brands represent who they are, validate and communicate their personal values, and provide a sense of belonging.”
Source: BCG’s 2013 Africa Consumer Sentiment Survey
75
PERCENTAGE OF CONSUMERS WILLING TO INCREASE SPENDING OVER THE NEXT YEAR
Take‐out meals, restaurants ‐30 ‐21 ‐17 ‐7 3 ‐21 ‐2 26 ‐6
Breakfast cereals, foods ‐10 ‐4 2 20 36 ‐1 21 32 16
Packaged foods ‐22 ‐4 ‐1 2 15 ‐2 24 30 8
Coffee, tea ‐4 ‐13 ‐5 5 26 ‐3 6 23 6
Wine ‐28 ‐17 ‐27 ‐6 25 ‐21 ‐12 26 0
Snack food ‐18 ‐25 ‐16 ‐17 5 ‐11 2 29 ‐2
Soft drinks, non‐alcoholic beverages ‐15 ‐12 ‐9 ‐14 13 ‐16 ‐7 29 ‐2
Beer ‐26 ‐15 ‐33 ‐11 ‐6 ‐18 ‐18 30 ‐2
Alcoholic beverages ‐22 ‐23 ‐31 ‐17 ‐7 ‐21 ‐22 26 ‐5
Chocolate, candy 6 ‐30 ‐22 ‐27 ‐19 1 ‐7 23 ‐7
Egypt GhanaAngolaAlgeria Nigeria South AfricaMoroccoKenya TOTAL
Source: BCG’s 2013 Africa Consumer Sentiment Survey
76
PERCENTAGE OF BUYERS WILLING TO TRADE UP IN SPECIFIC CATEGORIES
Take‐out meals, restaurants 32 17 12 33 31 23 29 32 27
Breakfast cereals, foods 31 22 33 33 46 19 34 32 32
Wine 45 20 20 18 47 33 28 34 28
Packaged foods 29 14 30 21 32 27 34 33 28
Alcoholic beverages 2 29 12 20 15 27 29 31 31 26
Beer 38 19 12 12 33 36 27 31 26
Coffee, tea 28 15 10 15 34 25 28 28 24
Chocolate, candy 41 14 11 14 19 16 25 28 22
Snack foods 30 14 18 15 25 15 24 29 22
Soft drinks, non‐alcoholic beverages 27 13 8 16 32 16 23 27 21
Egypt GhanaAngolaAlgeria Nigeria South AfricaMoroccoKenya TOTAL
Source: BCG’s 2013 Africa Consumer Sentiment Survey
SUPPLEMENTARY INFORMATION
186 204 235 265 287325
62.0 62.560.9 60.2 60.1 60.4
48
50
52
54
56
58
60
62
64
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013* 2014*
Operating Profit (Rm) Operating Margin (%)
78
OPERATING PROFIT – DOMESTIC FRANCHISING
Rm %
*This item includes Development division
6194 116
141 161204
5.7
7.88.4 8.7 8.4
9.5
012345678910
0
50
100
150
200
250
2009 2010 2011 2012 2013 2014
Operating Profit (Rm) Operating Margin (%)
79
OPERATING PROFIT – SUPPLY CHAIN
Rm %
9.6
11.8
15.3 15.313.6 13.1
2.43.0 3.0 3.5 3.5 4.0
024681012141618
2009 2010 2011 2012 2013 2014
Manufacturing Logistics80
OPERATING MARGINS – SUPPLY CHAIN
%
37.4 38.242.5 44.5 43.6
46.1
33.436.1 35.7 34.5 35.9 36.0
2.2 2.1 2.2 2.3 2.4 2.3
2.11.8
1.61.4 1.4 1.4 1.0
1.5
2.0
2.5
3.0
3.5
4.0
05
101520253035404550
2009 2010 2011 2012 2013 2014
RONA (%) ROE (%) Net Asset Turn (times) Dividend Cover (times)81
RATIOS
Times%
82
SHAREHOLDER ANALYSIS FEBRUARY 2014
Santie Botha
Panagiotis Halamandaris
83
BOARD OF DIRECTORS
Theofanis Halamandaris John Halamandres
Periklis Halamandaris
Kevin HedderwickBheki Sibiya
Darren Hele Norman Richards Khumo ShuenyaneChristopher Boulle
CONTACT INFORMATION
Kevin HedderwickGroup Chief Executive +27 11 651 5812
Norman RichardsGroup Financial Director +27 11 554 4788
Del‐Maree EnglishInvestor Communications +27 83 395 8608
www.famousbrands.co.za
84